Grab a pencil and let’s see where the housing cost numbers are today as you consider whether to continue to rent – or make the leap into home ownership.

Understand this is only number crunching and doesn’t consider other crucial decisions – like, are you willing to commit to one home for a period of time? Renters can give 30 days notice and move on.

So I’ve arbitrarily picked out 2 scenarios – 1) buying a $200,000 condominium in the very popular Todd Ranch condos complex in Ventura and 2) buying a “typical” $400,000 single family house.

Both examples use FHA financing with a 3 1/2 % down payment, 3.75% at today’s interest rate (good credit, etc), and a 30 years fixed rate.

Here’s how the numbers play out:

A Todd Ranch condo:

Mortgage payment – $894
Mortgage insurance – $201
Taxes – $190
HOA – $325
Total = $1,620 per month

Rents in Todd Ranch? About $1,650 – $1,750 depending on size and loacation.

Note this analysis doesn’t take into account tax benefits. You’ll deduct the property taxes and interest on your tax returns for an extra “pop” to your income. But don’t buy a home just because you get some tax benefits – that’s merely icing on the cake.

Buying a $400,000 single family house:

Mortgage payment – $1,788
Mortgage insurance – $402
Taxes – $380
Insurance – $63 (homeowners insurance premiums can vary depending on several factors)
Total = $2,633

Rents for a single family home vary substantially, but will probably be in the low $2,000 range to mid $2,000+ range.

The key takeaway here – for investors, it used to be a rule of thumb you needed a 50% down payment to break even on cash flow. Today, a minimal down payment of 3 1/2% about breaks even.  Now you know why investors are snapping up real estate! Just food for thought…